Taxes: The 2017 Shake-Up and What's Coming in 2026
Let's dive into the wild world of taxes – specifically, what went down in 2017 and what's on the horizon for 2026. Get ready for some tax talk, but don't worry, I’ll keep it casual and conversational.
The 2017 Tax Reform: What's the Buzz?
So, picture this: back in 2017, the Tax Cuts and Jobs Act (TCJA) shook things up big time. I’m talking major changes to the tax code that affected just about everyone – from individuals to businesses. Here's the rundown on some of the key highlights:
Lower Tax Rates for Individuals: The TCJA brought down the tax rates for most folks. That meant less money going to Uncle Sam and more staying in your pocket.
Standard Deduction Doubled: Forget about sweating over itemizing deductions – the TCJA nearly doubled the standard deduction. Tax-filing got a whole lot simpler for millions of Americans.
Changes to Itemized Deductions: While the standard deduction got a boost, some itemized deductions took a hit. We said goodbye to those state and local tax deductions over $10,000.
Corporate Tax Rate Cut: Businesses weren't left out of the party either. The TCJA slashed the corporate tax rate from 35% to a cool 21%. Talk about a game-changer for businesses big and small.
Pass-Through Business Deduction: Small business owners, rejoice! The TCJA introduced a new deduction for certain pass-through businesses, giving them a little extra breathing room come tax time.
Looking Ahead to 2026: What's in Store?
Now, here's where things get interesting. While the TCJA brought some great changes, a lot of its provisions are set to expire or revert back to pre-2017 levels by 2026. Here's the scoop:
Individual Tax Rates: Brace yourselves – unless Congress steps in, those individual tax rates are going back to their pre-2017 levels. Translation? You might be shelling out a bit more in taxes.
Standard Deduction: Remember that beefed-up standard deduction? Well, it's not here to stay. Come 2026, we might be looking at smaller deductions and bigger tax bills for some.
Itemized Deductions: And what about those itemized deductions? Yep, you guessed it – some of them are making a comeback. Get ready to dust off those receipts for state and local taxes.
Corporate Tax Rate: The good news? The lower corporate tax rate is here to stay. That's one less thing for some businesses to worry about as we head into 2026.
Pass-Through Business Deduction: Unfortunately, the party's over for pass-through businesses. That sweet 20% deduction? It's on its way out after 2025, so enjoy it while it lasts.
Why Tax Planning Matters
With all these changes on the horizon, it's more important than ever to get savvy about tax planning. Seriously, understanding the tax landscape and planning ahead can save you a ton of headaches (and money) down the line.
By strategizing when to recognize income, maximizing deductions, and taking advantage of tax breaks, you can keep more of your hard-earned cash where it belongs – in your wallet.
So, whether you're a seasoned investor or just trying to make sense of your tax situation, don't sleep on tax planning. Trust us, your future self will thank you.
Wrapping It Up
The TCJA brought some major changes to the tax game, but as we look ahead to 2026, it's clear that more twists and turns are on the horizon, especially as we are in a presidential election year. From individual tax rates to corporate tax cuts, the tax landscape is ever-evolving.
But with a little tax planning and some know-how, you can navigate these changes. So, here's to staying informed, staying ahead of the curve, and keeping more of that hard-earned cash in your pocket.
If you’d like a side-by-side of the TCJA taxes vs what they are set to revert to, CLICK HERE.
